The Prevailing Winds of “Cautious Optimism”

Do you feel like some days you are taking one step forward and two step backwards? For every economic prognosticator, there seems to be equal parts optimism and pessimism, and the stock market follows suit. Well, that’s because many leaders seem to be approaching this year with cautious optimism. In fact, recent research we conducted told us that 58% of senior leaders believe this year will be one of caution with limited hiring and renewed investment in talent development.

Like most people, employers aren’t sure what to expect in the year ahead. So it’s not surprising the survey findings reflect this uncertainty with a majority hedging their bets and expressing caution. The rest of the respondents seem fairly evenly divided between optimists and pessimists, with some 22% believing it will be a year of growth and recovery marked by increased hiring and new talent development initiatives and a further 16% believing it will be similar to 2010 with sluggish hiring and postponed HR initiatives. Very few (3%), however, anticipate more cutbacks and restructurings.

There is at least one positive sign of corporate confidence. Four out of five employers plan to renew or step up their investment in developing talent, a hopeful sign organizations are shifting their 2011 focus from cost-containment to growth.

And the source of real growth comes down to the quality of the talent in your organization. Talent, and the unique culture it creates, is the main source of competitive advantage and is becoming the only real source of sustainable differentiation. Having a solid, relevant talent strategy is the greatest enabler to delivering on business goals.

Executing strategic initiatives and delivering on near term bottom-line business goals are absolutely dependent upon a firm’s ability to manage talent better than their competition does. Aligning talent with business goals, through an integrated talent management strategy, is imperative to delivering on growth objectives.

Worker Insecurity Could Be Harming Productivity

Despite signs the economy is steadily improving, most employees feel less secure in their jobs compared to a year ago. According to our research as many as 71% of workers reported they are less secure in their job than last year, while 14% feel just as secure and 15% more secure.

This research finding surprised us. We really expected a more optimistic outlook by employees. In fact, we thought most respondents would tell us they were feeling at least as secure as a year ago now that it appears the recession is well past its depth. But it seems it will take more time for people to get over the trauma of the long downturn, and job security is probably the sort of indicator that lags behind any good news.

As further evidence, Manpower’s second quarter Employment Outlook projects that 74% of employers plan no staffing changes. With only 16% of companies expecting to hike hiring, and just 6% foreseeing any staffing decreases, it seems the word just isn’t getting through or that employers have been overly reticent about communicating their staffing plans with their employee base.

Persistent workplace unease can pose challenges for employers. Savvy leaders know that such widespread deep anxiety is no good for the organization in the long run. In order for employees to do their best they need to have a sense they’re valued by their organizations and engaged in a worthwhile pursuit. Top management has to address the job security issue head on, and communicate to workers what their role is in the organization’s future success.

Productivity may suffer when workers are busy with “water cooler” discussions, rumor mills and looking for a new job on your time-clock. The best thing a leader can do to promote security and confidence is to communicate regularly and with authenticity and candor. Most people feel greater confidence when they know they are dealing with the truth.

When was the last time you checked in on how your employees are feeling?

Stemming the Tide of Employee Defections

As new opportunities begin to open up in the job market the loss of top performers has emerged as the top concern of employers across the country. As many as one in three senior executives and human resource professionals told us that defection top talent is their most pressing HR challenge. A further 30% are suffering from a lack of high-potential leaders in their organizations and 22% have low engagement and lagging productivity. Staggeringly, 18% reported that they have a shortage of talent at all levels

Loss of top talent will likely emerge as the most pressing concern for many employers in the year ahead. This seems particularly prevalent in the service industry whose growth largely depends on the creativity and knowledge of their key employees. In fact, it’s now more of an expectation. After all, it’s no secret there’s a lot of pent-up frustration in the workplace and that many, if not most, employees have been floating their resume.

Many employers find themselves faced with a dilemma. Right now they don’t want to do much hiring, but at the same time they think they will lose top people. If these defections play out, that in turn will mean more hiring to fill key gaps. It seems pretty sure that in the year ahead job churn and turnover will notch upward, which may harm growth at many organizations.

Those organizations that can evaluate what drives workforce engagement – and the lack of it – are in a much better position to mitigate the risks of top talent flight to competitors. Simply understanding what the current workforce engagement levels are is no longer a sufficient strategy to stem the tide of potential attrition. Organizations that can identify what drives engagement in actionable terms, so that those drivers can be leveraged in an overall retention strategy, will be the winners of the emerging talent migrations.

Cutting Back on Cutbacks

For the past couple of years, organizations have cut costs and laid off staff. Most organizations have very little, if anything, left to cut. After two years of widespread downsizings most companies foresee few or no staff cutbacks in the year ahead. We recently surveyed more than 700 firms across the U.S. and learned that just five percent of firms nationally anticipate significant cutbacks or restructurings.

While it is anticipated that organizations will likely continue to be conservative with cash, many leaders are shifting from crisis mode to a growth agenda. According to research by Gartner, some 42% of CEOs are focusing more on revenue growth than cost control and 29% expect this to be the prime focus for 2011, according to Gartner research. In 2009, this research reflected CEOs’ focus on restructuring, layoffs, consolidation, write-offs and rebuilding trust.

So the road ahead will be one focused on growth. Many organization’s are at a point where they need to make a greater investment in talent to ensure strategic viability. An organization’s people are, in the end, the only differentiator that may be sustained. And a coherent strategy around talent will be needed to deliver on increasingly aggressive business goals. Businesses across the board have successfully taken costs out of their structure through a variety of methods. The challenge is rebuilding and growing the business with the talent left after the wake of cost cutting efforts.

Engagement and motivation levels are not the only challenges firms face when re-focusing the business on the future. The skill sets and abilities of the remaining workforce may or may not be what is needed to take the business forward. Organizations that evaluate what the “new normal” looks like – and how the mindsets, skills sets, motivations and abilities of the workforce need to be developed, adapted and changed to meet the future – dramatically increase their the chances of success.

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